Impact on Property Taxes Myths Revaluation is causing the rise in - PowerPoint PPT Presentation

2019 Revaluation and the Impact on Property Taxes

Myths • Revaluation is causing the rise in real estate prices • Increase in my property value means an increase in my property taxes • My property value increased so significantly it must be wrong • It costs money to have my assessment reviewed or appealed • There is no point in submitting an informal review if I know I am going to file a formal appeal. w w w . M e c k N C . g o v 2

How are Property Taxes Calculated?

How Property Taxes Are Calculated Value = $120,000 Value = $110,000 Value = $100,000 The total cost to provide all “County” services to the community is $1,000 Step 1: Total Property value = $330,000 (value of all 3 homes) Step 2: Cost to provide services = $1,000 Step 3: $1,000 ÷ 330,000 = .00303 30.30¢ = Property Tax Rate (per $100 of assessed value) w w w . M e c k N C . g o v 4

How Property Taxes Are Calculated $100,000 (Value) $110,000 (Value) $120,000 (Value) X X X 30.30¢ (Tax Rate) 30.30¢ (Tax Rate) 30.30¢ (Tax Rate) $303 = Tax Bill $333 = Tax Bill $363 = Tax Bill $1,000 approx. w w w . M e c k N C . g o v 5

Revaluation $105,000 $115,500 $132,000 Step 1 : Total Property value = $352,500 (value of all 3 homes) Step 2: Cost to provide services = $1,000 Step 3: $1,000 ÷ 352,500 = 0.002837 28.37¢ = Property Tax Rate w w w . M e c k N C . g o v 6

Revaluation $105,000 (5% increase) $132,000 (10% increase) $115,500 (5% increase) X X X 28.37¢ (Tax Rate) 28.37¢ (Tax Rate) 28.37¢ (Tax Rate) $303 = Tax Bill $363 = Tax Bill $333 = Tax Bill $298 (less) $374 (more) $327 (less) $1,000 approx. w w w . M e c k N C . g o v 7

Revaluation, Increase in Cost of Services & New Construction $105,000 $115,500 $150,000 $132,000 Step 1: Total Property value = $502,500 (value of all 4 homes) Step 2: Cost to provide services = $1,200 Step 3: $1,200 ÷ 502,500 = 0.002388 23.88¢ = Property Tax Rate 8 w w w . M e c k N C . g o v

Revaluation, Increase in Cost of Services & New Construction $115,500 $132,000 $150,000 $105,000 X X X X 23.88¢ 23.88¢ 23.88¢ 23.88¢ $333 $363 $358 $303 $276 (less) $315 (less) $251 (less) $1,200 approx. w w w . M e c k N C . g o v 9

Revenue Neutral

What is Revenue Neutral? Revenue Neutral Is… • Calculation of the tax rate that would generate the same revenue accounting for growth • Provides comparison of the tax rate before and after revaluation • Published with the Budget per the General Statute • Calculated only after total values are known • Single value Revenue Neutral Is Not… • Required to be adopted • A value that varies by different property types or locations • Impacted by rates of cities or towns • A calculation that factors o Changes in collection rate o One-time revenue from the prior year, such as carryforward or fund balance o Annualized expenses w w w . M e c k N C . g o v 11

Calculating Revenue Neutral Example FY2019 Value FY2019 Rate FY2019 Tax Levy $129,723,000,000 82.32 $1,067,879,736 Average Annual % Increase FY2020 Value Rate Required to Due to Improvements $182,180,000,000 Generate FY2019 Levy (example only) 2.36% 58.62 Revenue Neutral Rate 60.00 (example only) w w w . M e c k N C . g o v 12

Tax Bill Scenarios

Median Home Value EXAMPLE ONLY FY2019 82.32 cent tax rate Median Home FY2019 Home Value $154,100 Value of Vehicles $23,944 County Tax Bill $1,466 Potential assessment outcome Example with FY2020 Low Mid High 60 cent tax rate Home Value $198,542 $216,372 $241,660 Change in Value 28.84% 40.41% 56.82% Value of Vehicles $23,944 $23,944 $23,944 County Tax Bill $1,335 $1,442 $1,594 Change in Tax Bill/month ($10.91) or (8.9%) ($2) or (2.2%) $10.66 or 8.7% w w w . M e c k N C . g o v 14

What about a property below the median? EXAMPLE ONLY FY2019 82.32 cent tax rate Below Median Home FY2019 Home Value $104,400 Value of Vehicles $23,944 County Tax Bill $1,057 Potential assessment outcome Example with FY2020 Low Mid High 60 cent tax rate Home Value $134,509 $146,588 $163,720 Change in Value 28.84% 40.41% 56.82% Value of Vehicles $23,944 $23,944 $23,944 County Tax Bill $951 $1,023 $1,126 Change in Tax Bill/month ($8.83) or (10%) ($2.75) or (3.2%) $5.75 or 6.6% 15 w w w . M e c k N C . g o v

What about a property above the median? EXAMPLE ONLY FY2019 82.32 cent tax rate Above Median Home FY2019 Home Value $242,200 Value of Vehicles $23,944 County Tax Bill $2,191 Potential assessment outcome Example with 60 FY2020 Low Mid High cent tax rate Home Value $312,050 $340,073 $379,818 Change in Value 28.84% 40.41% 56.82% Value of Vehicles $23,944 $23,944 $23,944 County Tax Bill $2,016 $2,184 $2,434 Change in Tax Bill/month ($14.58) or (8%) ($.58) or (0.6%) $19.33 or 10.6% 16 w w w . M e c k N C . g o v

What about a really high value property? EXAMPLE ONLY FY2019 82.32 cent tax rate High Value Home FY2019 Home Value $500,000 Value of Vehicles $23,944 County Tax Bill $4,313 Potential assessment outcome Example with FY2020 Low Mid High 60 cent tax rate Home Value $644,200 $702,050 $784,100 Change in Value 28.84% 40.41% 56.82% Value of Vehicles $23,944 $23,944 $23,944 County Tax Bill $4,009 $4,356 $4,848 Change in Tax Bill/month ($25.33) or (7.1%) $3.58 or (1%) $44.58 or 12.4% w w w . M e c k N C . g o v 17

Key Points • New construction spreads the tax burden across the tax base • The property tax rate will be calculated based on the entire tax base and the cost of providing essential county services • Other revenues including sales tax are also used to pay for essential county services • Revenue neutral tax rate does not equate to having no change to the individual tax bill w w w . M e c k N C . g o v 18